Budgeting is a great life skill – particularly if you're studying, supporting a family, saving for a house deposit or trying to pay off a loan. Getting a hold on your income, expenditure and financial goals is an exercise in freedom and, once good financial habits are established, they can set you up to live large without blowing the budget.
Here are some top tips for budgeting:
Separate bank accounts
The cardinal rule of effective budgeting – if you haven't done so already, set up separate bank accounts to manage your cash flow better. These days it's cheap – and often free – to form a new account with your bank. How many accounts you have is up to you: most of us have cheque and savings accounts, but it's wise to consider additional savings accounts for various uses.
Keep one savings account for monthly expenses (like rent, food, petrol, utilities and debt repayments), then open additional accounts for specific financial goals such as "holiday savings" or "house deposit". You can then easily track savings progress without dipping into living expenses.
Budgeting apps and tools
A great place to start is Sorted, a free service by government-funded independent agency Te Ara Ahunga Ora Retirement Commission, geared at helping Kiwis get ahead financially. Sorted offers budgeting and goal-planning tools, KiwiSaver calculators, a savings calculator and more. Elsewhere, try tools like PAYE, PocketSmith and Wally for budgeting needs.
Change your mobile phone plan
Kogan Mobile offers the most affordable unlimited prepay deals in the country; making the switch is ridiculously easy. New customers are rewarded with a discounted rate of $5 for the first 30 days, including up to 15GB of data (depending on which plan you choose) and unlimited calls and texts to local and Australian numbers. They also have a range of 365-day prepay plans starting at only $160 per year which give you further savings.
Spring-clean old memberships & subscriptions
Holding on to that old gym membership or continuing to pay for that video streaming service or subscription might be doing more harm than good. Be honest – do you use it often enough to justify the expense? Are you ever going to use it? If yes, great! If not, ditch it and save the cash. It might be worth exploring free exercise ideas – there are plenty around, even before you get to TV and Netflix.
Once you've done that, continue the spring clean: what else are you paying for but not using? Check your bank or credit card statements over the last 12 months to catch annual recurring subscriptions you may have forgotten about. Do a regular check of any mobile app subscriptions too. If you're an iPhone user, head to Settings, tap on your Apple ID, then Subscriptions –from there you can track, manage and cancel active subscriptions. Android users can do the same using Google Play.
Shop online
When purchasing items online, do a bit of shopping around for the best deals. Many online stores such as Mighty Ape offer free delivery and same day dispatch across their wide range of products. Dick Smith offers high quality electronics and other goods at budget-friendly prices too.
Switch power suppliers
Consumer NZ's Powerswitch is a free, independent service that helps you work out which power company and pricing plan is cheapest. With a comprehensive database of electricity and gas prices, it's a great tool for comparing plans and finding the best deal in your area.
Meal planning
This can feel like a drag but ultimately it's an investment in your savings goals (and your health!). Taking the time once a week to sit down and plan your meals – particularly for a family – can make the rest of the week much easier and set you up to seriously reduce costs. That's especially so if you cook in bulk – it pays to make use of that freezer. A full freezer also costs less to run. Good meal planning has health benefits too: if you think ahead, you're less likely to fall back on last-minute takeaways. Check out 'Cooking on a budget' tips to get you started.
Make healthier choices
We all have our vices but at what cost? With the price of cigarettes constantly rising, there's never been a better time to quit (QuitStrong is a great place to start). It's not just smoking – cutting down on alcohol helps financial and physical health; swapping takeaway coffee for homemade cuts daily costs; and avoiding takeaway food is better for your wallet and wellbeing.
Improve your financial literacy
It's one thing to change your spending habits, another entirely to change your outlook on money and improve your financial literacy. Unfortunately, money management isn't something all of us are taught in high school – which is why we're lucky Te Wānanga o Aotearoa offers an excellent (and free) course, the NZ Certificate in Personal Financial Capability & Financial Services.
In this 20-week course, you'll learn about budgeting; debt management and credit ratings; savings and investments; KiwiSaver and planning for retirement; home ownership; how to create and protect wealth; as well as trusts, wills, and estate planning.
If you're serious about improving your money management skills, this is a great next step in the journey.